I received a nice notice from my commercial GL carrier advising the coverages at renewal would materially change. Admitted carriers have to provide such notices (E&O point: exceptions to this rule do exist, even for admitted carriers and always remember surplus lines companies do not have to provide notice of material change because their agents have this responsibility). The notice I received is designed to comply with regulations. It is not designed to convey usable information. That is the problem. Compliance with regulations like these does not benefit the consumer. The regulations look good on paper but are actually useless.
I make my living in this industry, and yet, to know what coverages are being changed, I would have to go through my latest policy line by line, especially because the notice did not provide the reference points (such as section 2, part A is changing). The notice even says they are transitioning their liquor liability to ISO’s liquor liability – modified by their proprietary liquor liability endorsement. My thought, “Awesome! I guess? I suppose? I honestly do not have a clue.”
Furthermore, if I was not in the industry, I would wonder who is ISO? If their form is so good, should I buy my insurance from ISO? Did my insurance get sold to ISO? Honestly, this notice tells me absolutely nothing, but it sows confusion. If I was a regular consumer, I would be thinking, “I don’t sell liquor and my business has nothing to do with liquor, so why should I even care? Do they have me mixed up with some bar?”
Dear Professional Agent: This is your opportunity to shine. This is your opportunity to earn your commission. Can you send a note to your clients who are receiving this notice explaining what the changes mean? At least advise them you will cover these material changes at the renewal meeting?
You see, you are the middleman. You earn your keep, if you are earning your keep, by being fluent in consumer language and insurance language. You are the translator between two people speaking different languages. People need you to translate. Even if they ignore these notices, most clients are annoyed by them, and for many, their trust in you is eroded a bit more. This is your opportunity to build their trust in you: their agent.
If you leave them on their own to figure out what this notice means – or not – you are still communicating. Silence is a message, and in this case, silence says you do not care. Silence is what small commercial and personal lines clients hear from their agents over and over. I know many consultants advise against spending time with these customers. I know many agents have decided they cannot spend time on these clients and still be profitable. If you cannot find a way to do your job, then you probably should not have these people as customers.
I have said this to many agency owners and many have reacted, “you are right.” Others have reacted, “But that is how I make my money!” Think about the future of a business model dependent on making money by not doing one’s job. There is a reason almost all insurance carriers are after small commercial and many insurtechs are after both personal lines and small commercial accounts. They see opportunity in agents not doing their jobs. So traditional brick and mortar agents have the choice of figuring out how to make money doing their jobs or losing these customers and the profit center they provide.
I vote for figuring how to make money, and the solution is simple. My clients that do this win. The solution? Use a coverage checklist. The reason small commercial and small personal lines accounts exist is because someone did not use a checklist. When a checklist is used well, people buy more insurance and the account ceases to be small. Small accounts typically exist for no reason other than the agent failed to sell the insured coverages the insured truly needs. The insured has a coverage gap, the agent has a material E&O problem, the agent has lost revenue and profit, and the agency is vulnerable to the insurtechs.
The solution is easy, but execution is tough. Using a checklist effectively is hard work. The usual reasons I hear for not using coverage checklists are symptoms and not the disease. The symptoms are it takes too long, the client is not interested, etc. The real reason for not using checklists is simpler. Most producers and account managers do not know their coverages well enough to use a checklist effectively. Furthermore, they do not know how to use the checklist to develop a conversation.
There is a reason almost all insurance carriers are after small commercial and many insurtechs are after both personal lines and small commercial accounts. They see opportunity in agents not doing their jobs.
Step one is to decide whether you want to be a professional agent. I get many agents and producers complaining about their agencies’ E&O standard of care, and they get frustrated if they are held to providing clients coverage advice. They want to pick which clients they advise. Many, egged on by certain E&O carriers and associations, want to rely on the insured having to read their policies and understand them.
In today’s world where a plethora of DIY insurance purchasing options exist, often at lower prices, no one needs an agent who does not want to meet a professional standard of care. Soon, many insurance carriers will not need these agencies either.
Deciding to be a true professional is a big step, just as the commitment to be a true professional in any vocation requires. A true professional has a bright future.
Step two for a professional agent is to know one’s coverages. To learn one’s coverages, most CE classes are just window dressing. You have to commit to the higher quality education programs regardless of whether CE credit is attached.
Step three is learning how to discuss coverages and how to use a coverage checklist. My firm is having a great time teaching coverages and how to effectively use checklists to people who are willing to work hard to become true professionals. Their energy to build, rather than hearing the whining complaints of amateur agents, is a breath of fresh air. They are learning how to bring energy to their client meetings, build better and stronger relationships and increase sales in the process.
What you do going forward is up to you, obviously. What will your choice be?
Burand is the founder and owner of Burand & Associates LLC based in Pueblo, Colo. Phone: 719-485-3868. E-mail: firstname.lastname@example.org.
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